Capgemini conducts a survey each year in conjunction with the ELFA — the Business Technology Performance Index (BTPI) survey, which focuses on trends in operations and technology in the equipment finance industry. In the survey there has been a consistent theme for the past four to five years — companies are being driven by business needs to update legacy platforms, yet the cost, complexity and potential risks force them to put off the initiative year after year.

One survey respondent captured the quandary succinctly, expressing concern both about the “…inability of their current platforms to meet current and future needs and the extensive, high-risk process of replacing the current core infrastructure.” In follow-up discussions with some of these respondents they cite: resource and budget limitations, concerns about multi-year implementation projects and the complexity of what has been built into their current infrastructure over a long period of time as issues that are difficult to mitigate. Many have expressed that unraveling the “spaghetti” of customizations and integrations, and the tens or hundreds of spreadsheets and access databases supporting the business can be a daunting task; and, there are no guarantees of success, no matter how much is spent on the effort.

At the same time, the needs of the business are growing. One BTPI respondent talked about needing a six-to-nine month lead time to fully support the rollout of a new partner program primarily due to the limitations of their core systems. The expectations of the business about the same program support were measured in weeks. Implementing a solution that is “…flexible enough to meet the changing needs of the business and our customers” was how another company described it.

Despite the challenges, many companies with limited requirements, straight forward business models and smaller size portfolios are good candidates for some of the new platforms on the market. Many of them have incorporated strong functional capabilities with a good technology infrastructure. Others however, might want to consider Business Process Management (BPM) solutions when they think about alternatives.

How do Business Process Management Solutions Work?
BPM solutions are software applications that are typically built around a few concepts:

The objective is that rather than replacing aging core platforms with new ones, larger benefits can be gained from revitalizing and reengineering the workflows and operations associated with the business processes. This can be accomplished without the risk, cost and duration of a core system replacement.

One simple example is the deployment of BPM for asset management processes. This is an area that traditional servicing systems handle in a very limited way. These contract-centric systems often do not provide capabilities beyond the end of the contract life. A BPM solution for asset management processing might include:

For this asset management process, the BPM solution would provide the user interface screens (configured for the specific process), the workflow to move the transactions from resource to resource and the business rules to make “intelligent” choices based on the underlying transaction (for instance, if equipment = type “forklift,” then direct customer to return equipment to warehouse “A”).

A few other common uses of BPM solutions for equipment finance firms might include:

One of the key benefits of the platforms is that, unlike core platforms that are often deployed in a single phase, BPM solutions normally break the processes down into manageable pieces. Deploy customer service processes first, and then collections, asset management and originations — in other words — prioritize the components in the logical order that benefits the business.

Typical Core Platform Challenges Faced by Asset Finance Companies Today

The Technology
The technology underlying the leading BPM solutions on the market are focused on “ease of integration, configuration and use.” Some common technology elements would include:

Is Your Firm a Good Candidate for BPM?
Frankly, not all companies are good candidates for BPM solutions. Given the enterprise capabilities of the platform, the business case must typically be driven across multiple equipment finance channels or large-scale portfolios. Companies with smaller portfolios and one or two go-to-market channels would likely be better served by modernizing their legacy core platforms. Alternatively, the model for a successful implementation often contains the following elements:

Across a variety of industries where legacy platforms are prevalent and challenging to replace (including banking and insurance), companies are considering BPM solutions as an alternative to system replacement. As equipment finance companies look to the future and consider alternatives to modernizing their legacy technologies, they may want to include BPM solutions in the mix for consideration.

Steve Byrnes is the leader of Capgemini’s Asset Finance practice. His professional experience includes 26+ years of employment in, and consulting to, the asset finance industry. He uses his finance and operations background to assist companies with projects ranging from business strategy development/organization assessment, through the implementation of systems and processes required for execution. Byrnes can be reached by e-mail at steven.byrnes@capgemini.com.

Michael Donnary is a senior manager in Capgemini’s Asset Finance Practice in Chicago. He has worked in and consulted to the banking and asset finance industries since 1992. In addition to system selection, implementation and organizational assessment projects, he has worked extensively with companies to integrate emerging technology solutions with existing legacy systems. Donnary can be reached by e-mail at michael.donnary@capgemini.com